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114166
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
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S. HRG. 114166
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
(
Printed for the use of the
Committee on Energy and Natural Resources
95273
2016
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(II)
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CONTENTS
OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska ..................
Cantwell, Hon. Maria, Ranking Member, and a U.S. Senator from Washington ....................................................................................................................
Portman, Hon. Rob, a U.S. Senator from Ohio .....................................................
Hoeven, Hon. John, a U.S. Senator from North Dakota ......................................
Gardner, Hon. Cory, a U.S. Senator from Colorado .............................................
Stabenow, Hon. Debbie, a U.S. Senator from Michigan .......................................
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WITNESSES
Collins, Hon. Susan M., a U.S. Senator from Maine ............................................
Coons, Hon. Christopher A., a U.S. Senator from Delaware ...............................
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire ............................
Schatz, Hon. Brian, a U.S. Senator from Hawaii .................................................
Klobuchar, Hon. Amy, a U.S. Senator from Minnesota ........................................
Hogan, Dr. Kathleen B., Deputy Assistant Secretary for Energy Efficiency,
Office of Energy Efficiency and Renewable Energy, U.S. Department of
Energy ...................................................................................................................
Crasi, Tony, on behalf of the National Association of Home Builders and
Owner and Founder, The Crasi Company, Inc. .................................................
Gayer, Dr. Ted, Vice President and Director of Economic Studies, Joseph
A. Pechman Senior Fellow, The Brookings Institution .....................................
Nadel, Steven, Executive Director, American Council for an Energy-Efficient
Economy ................................................................................................................
Therriault, Hon. Gene, Vice-Chairman, National Association of State Energy
Officials, and Deputy Director, Energy Policy and Outreach, Alaska Energy
Authority ...............................................................................................................
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The text for each of the bills which were addressed in this hearing can be found on the
committees website at: http://www.energy.senate.gov/public/index.cfm/hearings-and-businessmeetings?ID=a7ea3045-7029-4e1e-abeb-edf57628ab47.
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U.S. SENATE,
NATURAL RESOURCES,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m. in room
SD366, Dirksen Senate Office Building, Hon. Lisa Murkowski,
Chairman of the Committee, presiding.
COMMITTEE
ON
ENERGY
AND
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could we be than ceiling fans? Several reauthorize established programs and several others require new standards and programs.
Some are voluntary in nature while some are mandatory. Still others seek to make the Federal Government more effective in financing and implementing efficiency projects.
Taken as a whole the bills before us cover a wide variety of efficiency ideas. They offer the potential to reduce energy usage and
costs across our country and throughout our economy. They put forward methods to enhance our leadership on efficiency technologies
and to develop a cadre of professionals to work within the field.
They also seek to protect consumers, manufacturers and the environment from unintended consequences of new or revised standards.
I am pleased that we have witnesses here who can speak to these
many bills as well as the impacts they will have on the government, not only the Federal Government, but our state governments, consumers, the economy and front line project implementers.
It should be an interesting, pretty far-ranging discussion this
morning, but I think it is, again, important that we consider how
we can work to build an energy efficiency title that works for all.
In the interest of efficiency and in light of the measures that we
are going to be considering this morning, I will conclude my comments and turn to the Ranking Member for her comments this
morning. Welcome to our fellow colleagues who have taken time
out of their very busy mornings to come before the Committee, and
we look forward to your comments as well.
Senator Cantwell.
Senator CANTWELL. Thank you, Madam Chair, and thank you for
holding this first of several legislative hearings on a process to
move us forward on energy policy. Hopefully we will be building a
record here for important steps in crafting legislation that we can
successfully move through both the House and the Senate.
I also want to thank our witnesses today. We are going to hear
from several of our colleagues, and I certainly appreciate Senators
Collins and Coons being here and for their leadership on a variety
of issues related to energy efficiency and continued focus in this
area.
I know our colleague, Senator Klobuchar, is joining us as well.
Yesterday she shared a round table discussion with many energy
efficiency leaders, so we thank her for that as well.
Today we are here to discuss energy efficiency which is, in some
ways, the most obvious of energy sources. Why is that? Well, it is
pretty simple. It is just the math. It is compelling economics. Energy efficiency costs less than half of what it costs for new energy
production. The Lawrence Berkeley National Laboratory has estimated the cost of energy efficiency is 4.5 cents per kilowatt compared to 12 cents per kilowatt for new production.
In short, energy efficiency as a resource is larger, cheaper, a better job creator and carries lower environmental impacts than the
alternatives. Not only does it save consumers, but it strengthens
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the economy, builds flexibility in our grid and reduces carbon pollution.
Let me say just a few words about the economic benefits. From
2007 to 2014 national energy use fell 2.4 percent while GDP grew
eight percent. In other words, we experienced an energy productivity increase of 11 percent in eight years. That means for every
electron or molecule of energy consumed in the U.S., we are getting
more and more economic production.
A handful of programs at the U.S. Department of Energy or DOE
are important contributors to this dynamic. DOEs Building Code
program, for example, will help put more than $7.4 billion back
into consumers pockets in 2020 and up to $230 billion by 2040.
This programs original cost was about $100 million from 1992 to
2012. So, basically that is a ratio of $400 in savings for every dollar
spent. I think that is a pretty impressive ROI.
Similarly the Appliance and Equipment Standard programs cost
the nation $40 million annually and on average has reduced our
nations electricity consumption by seven percent below what it
would otherwise have been. In a typical household, energy costs are
about $500 a year less than they would have been if there had not
been this National Appliance Efficiency Standard Program.
So when we discuss these initiatives I think it is important for
my colleagues to remember that it is often the case that successful
Federal programs have been built on the hard work and leadership
of a number of states. The drive towards energy efficiency, at the
time policy makers called it conservation, really began with efforts
on the West Coast.
Californias energy efficiency efforts have helped the state avoid
the need for at least 30 power plants, saved consumers $65 billion
and eliminated carbon pollution equivalent to 5,000,000 cars off the
road.
The Northwest Power Planning Act, which originated in this
Committee, was enacted in 1980 and made conservation the resource of first resort in our regional power plans and even gave rise
to some of the nations first models of conservation code efforts.
Today, some 24 states have laws on their books on energy efficiency resource standardsbinding saving targets for utilities or
similar activities. Once again, I think it is fair to say that the resources that cost consumers less, make our economy more competitive and reduce environmental impacts are always a good thing for
our nation.
So the question before us today is what more can be done to
drive energy efficiency into our economy?
The U.S. economy in the advent of the distributed generation,
dozens of opportunities exist across residential, commercial, industrial and agriculture and government sectors. I think we should
consider a number of approaches to fully leverage these opportunities.
First, we need the right framework and incentives for utilities to
fully embrace the least cost resource. Senator Frankens legislation
that we are going to hear about today, the Federal Energy Efficiency Resource Standard, is one method to drive this outcome. So
I look forward to that topic today.
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In my state, Seattle City Light used a variety of efficiency measures to reduce its load annually by 1.3 megawatts per year which
is the equivalent of a 150 megawatt power plant. So we need to
create similar conditions.
Second, we need a robust Federal commitment to research and
development of new technologies that will continue to lead the way
on energy. Technology innovation is one of the key ways to create
continuous cycles of efficiency, and one example of this is the opportunity of R and D on high performance buildings.
We have major employers that are aggregating and analyzing
business data on their corporate campuses in order to learn where
costs can be cut and to help achieve a carbon reduction goal. I have
introduced legislation to help accelerate this transition to smart
buildings by supporting research on data, on software, and on communication systems.
We also cannot forget the opportunities of efficiency in the transmission and distribution grid. On Tuesday Secretary Moniz was
here to discuss on the Quadrennial Energy Review, and he outlined
several recommendations to create more flexibility, more resilience
and increase energy efficiency.
Third, we must be committed to the network partnership between Federal, state and local institutions. Manufacturers, utilities, consumers and stakeholders, they all play a role in this. The
issue is that we have to have Federal leadership with respect to
things like the appliance standards and continue to lessen regulatory burdens and be a platform for demonstration. Most people
will tell you that the demonstrations we show then enable the private sector to implement them across many different businesses.
There is a lot to be done in driving these outcomes, but I look
forward to working with Chairwoman Murkowski and members of
this Committee, who all have great ideas on putting a good energy
efficiency title in an energy bill.
Thank you.
The CHAIRMAN. Thank you, Senator Cantwell.
Lets start with our good ideas.
We will hear from our colleagues who have taken time from their
busy morning to come before the Committee to present some of the
areas where they feel we can make some headway when it comes
to efficiencies whether it is within our schools, through weatherization programs or the approach that Senators Portman and Shaheen
have brought to the table, clearly leading on this area, a critically
important area of energy efficiency throughout our economies.
We will start this morning with you, Senator Collins, as you
speak to your legislation about retrofitting our schools and the energy savings that we can find there. This was something that we
considered during the budget process, and I think you enjoyed
good, strong, bipartisan support.
I believe Senator Coons was a co-sponsor of that as were many
of us, so thank you for your leadership and if you would like to lead
off this morning? Welcome.
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and survey the entire Federal Government until they stumble upon
one of these programs.
Our bill would require DOE to review the existing Federal programs which are scattered at the Departments of Agriculture, Energy, Education, Treasury, the IRS, EPA. No wonder schools are
having difficulty in finding how whether these programs exist and
how to access them.
It would also streamline communication and outreach to the
states, local education agencies and schools to help them facilitate
partnerships to support the initiation of these projects.
The Department would also provide technical assistance to help
schools navigate project financing and development to better ensure their successful applications.
Assisting our nations schools, many of which are very old and
in need of energy efficiency upgrades, in tapping into existing Federal programs to lower energy usage and save money is just common sense.
Finally let me note, I see this as the first step. As we have this
coordinating structure we may well decide that some of these programs should be moved to a central agency. GAO has done a little
bit of work on this, but I believe by establishing this coordinating
mechanism that it will enable us to do a better job of helping
schools access these programs. Thank you very much.
The CHAIRMAN. Thank you, Senator Collins.
Senator KING. Madam Chair?
The CHAIRMAN. Senator King.
Senator KING. Unfortunately I have to return to a hearing on the
Ukraine in the Armed Services Committee, but I wanted to commend to the Committee the principle that I followed since arriving
here which is do what she says. [Laughter.]
Senator COLLINS. Thank you, my thanks to the Senator from
Maine.
The CHAIRMAN. Wise words from the Junior Senator from Maine.
We appreciate that, and we appreciate all of your interest in these
issues, Senator King, and your involvement in the Committee.
Senator Collins, thank you for not only being persistent in this
area, but also reminding us that we do have considerable programs
scattered throughout our agencies that are there to help, but so
much of it is knowing how to access.
I think Senator Coons, you know, very keenly, that when we are
talking about the issue of weatherization, we have weatherization
programs scattered all throughout. How we can better collate them
so that we can access them and be more efficient than with what
has already been established is key. So, we appreciate your leadership in this area and look forward to your comments on Senate bill
703.
Senator Collins, I am sure you have places to go, so if you want
to excuse yourself we appreciate you coming by the Committee this
morning.
Senator Coons.
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As a related issue, as many of you know, we also need to fix
CBOs scoring treatment of ESPCs and several of us here today
have been working to fix that scoring hurdle through this years
budget. If successful, this bill, along with other policy ideas, can be
advanced without running into that artificial hurdle to bring about
many benefits for Federal facilities and programs. It is through efforts like ESPCs that we can put more American electricians and
plumbers and local building contractors to work.
Now the bill that has really been one of the most significant
pieces of energy efficiency legislation offered in Congress in many
years is one with which we are all familiar and to which Senator
Shaheen will speak momentarily, S. 720, the Energy Savings and
Industrial Competiveness Act. I am proud to have been a co-sponsor. Senators Portman and Shaheen have diligently worked to get
several of their provisions recently passed into law, but it is critical
we continue to pass, press for passage, of the entire bill.
Senator Gardner, I was just speaking about our ESPC bill a moment ago.
Last, while energy efficiency is one crucial part of our larger energy challenge, I would briefly like to mention a bill related to the
bigger energy picture. The Administration, as you well know, just
released its Quadrennial Energy Review report which provides a
valuable snapshot of our energy infrastructure needs. Im glad this
Committee held a hearing on the QER just last Tuesday and we
should ensure that this and future Administrations continue to
carry out such reviews to inform the national energy discussion.
That is why I recently introduced S. 1033 with Senator Alexander
to ensure that QERs become codified into law so that each successive Administration follows through on this important audit of our
nations energy policies and needs.
Madam Chair, Ranking Member, members of the Committee, I
would just like to thank you for your leadership and your attention
to the important opportunity that energy efficiency holds for our
country. I am glad energy efficiency continues to be an important,
valuable and bipartisan issue that owes, in no small part, to your
leadership and the collective efforts of many colleagues present
today.
Our energy challenges may be great, but I fervently believe we
can meet them by working together on sound, common sense policies such as the bills discussed today.
Thank you, Madam Chair.
The CHAIRMAN. Thank you, Senator Coons. Know that we look
forward to working with you, not only on the weatherization enhancement but also the other measures that you are clearly engaged on. You have been a cooperative, willing and engaging partner, and we look forward to continuing that.
Next lets go to Senator Shaheen for your comments on the Energy Savings and Industrial Competitiveness Act, an act that you
and Senator Portman have led for years now. As has been noted,
there have been incremental pieces that we have advanced through
the process. I think it is fair to say that when we had these initial
discussions about how you move forward on Shaheen/Portman we
all thought that we were going to be pursuing the low hanging
fruit. We all thought that this was going to be the easy energy bill
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that we move forward. Unfortunately, due to a host of varying and
complicating factors, that did not prove to be so, but I still believe,
very strongly, that this should be that area where regardless of
where youre coming from on fossil verses renewables verses how
we build out our capacity that when it comes to energy efficiency
we ought to be able to figure out a positive and a constructive path
forward.
I thank you both for your diligence and your continued efforts to
remind us of the opportunities that we have within efficiency. I
look to you, truly, as the leaders.
Senator Shaheen, we will lead off with you and then I would like
to turn to you, Senator Portman, for your comments on your legislation after which we will move down the line to listen to the other
measures that we have in front of us.
Senator Shaheen.
Senator SHAHEEN. Thank you, Madam Chair and thank you and
Ranking Member Cantwell for holding this hearing this morning,
to the members of the Committee for all of the great work thats
going on. I am very excited that you are talking about a comprehensive energy bill that is going to start with energy efficiency
because it is, as you both said so eloquently, the cheapest, fastest
way to deal with our energy needs.
I want to just salute my partner in this effort to pass the Energy
Efficiency and Industrial Competitiveness Act, Rob Portman. He
actually had dark hair when we started on this initiative. [Laughter.]
We are both getting older while this is going on. This is legislation that I sometimes call Shaheen/Portman. He calls it Portman/
Shaheen. [Laughter.]
But whatever you want to call it, it is a big step toward a smart,
energy policy for this country. And I just want to thank Senator
Portman for his very productive partnership in this effort.
As you pointed out, Madam Chair, earlier this year with the
Committees assistance and I want to recognize Senator Hoeven,
Senator Klobuchar, and Senator Franken for their effort to help us
pass a targeted version, a mini version of energy efficiency that included three provisions that passed by a voice vote. The House followed suit last week, and the President is going to sign it into law.
It will be the first energy bill that has passed Congress this year.
So I think, hopefully, that bodes well for the opportunity to do
more in energy efficiency.
I do not want to spend a lot of time talking about the legislation
that Senators Coons, Schatz and Collins are all here also to address, but I just have to say I think there are some terrific ideas.
I am proud to co-sponsor a number of those.
I do want to highlight, as Senator Coons did, the bill that he and
Senator Gardner are working on because I think there is tremendous opportunity for us in the Federal Government to save money
through energy savings performance contracts. They are no
brainers, I think, as we look at how we can save money.
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And as, again, everyone has said so eloquently, energy efficiency
is something that we can all get behind. This brings us together
on a bipartisan, bicameral basis.
Now, since the early 70s we have, through efficiency, saved about
or reduced our energy use in this country by about 60 percent. I
think it shows what could be done if we can pass Portman/Shaheen
in this session of Congress.
By 2030 if we pass the legislation the bill would create almost
200,000 jobs, cut carbon emissions by the equivalent of taking
22,000,000 cars off the road and save consumers over $16 billion
a year. So this is a win/win/win.
As the Chair alluded we introduced this bill first in the 112th
Congress, then the 113th Congress. So Im hoping the third time
is a charm. It has tremendous support from all sectors, people who
do not usually all support the same bill, environmental groups,
business groups from the U.S. Chamber to the American Chemistry
Council, to labor organizations because it creates jobs, it reduces
costs to consumers and it is good for saving on pollution.
So, Madam Chair, as the Committee is thinking about moving
this comprehensive energy bill, I hope you will think about the opportunity to mark up and move separately the Energy Savings and
Industrial Competitiveness Act because it has already been vetted,
because this Committee has had a chance to look at it in the last
two Congresses. Im hoping that you will agree with me that it deserves a separate examination that is outside of the comprehensive
energy legislation and then if the Committee feels that you need
to put it back in, I certainly understand that. But I hope that given
all of the work that has been done that you might be willing to consider this as a separate bill outside of the efficiency title in the legislation.
So, again, I thank you for the opportunity to be here, and I look
forward to seeing the great work thats going to come out of this
Committee on a comprehensive energy bill, including efficiency.
Thanks.
The CHAIRMAN. Thank you, Senator Shaheen, and know how
carefully we are reviewing all of this. I think it is worth noting the
three of you at the table here this morning are all former members
of this Committee and have all contributed significantly in the area
of energy. So it is nice to know that you have not lost that interest
just because you moved on out of this Committee room. I would
like to ask
Senator CANTWELL. Madam Chair, if I could just add to that
point.
It is certainly a loss when we lose members from this Committee,
but the fact that so many of them go on to the Appropriations Committee we will make sure we are keeping in contact with them
[Laughter] as it comes to the funding of various energy programs.
Thank you.
The CHAIRMAN. Duly noted.
Senator Portman, as truly a leader for years in this area and
continuing to be so, I would like to invite your comments on the
Energy Savings and Industrial Competitiveness Act. It is hard for
me to say that because we just referred to it as Shaheen/Portman
or Portman/Shaheen and recognize you and your leadership with it.
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amendments, but also to allow us to actually get something done
that we think can be, not just bipartisan, but bicameral.
Cory Gardner, who just left the House, is here, and he was one
of our leaders in the House. Hopefully he left some folks behind
who understand the importance of this legislation, but we do have
support on both sides of the aisle in the House.
I just want to thank Senator Shaheen. We have worked on this
for three and a half, maybe four years now. As she said, I had dark
hair when this started. [Laughter.] Senator Gardner says that my
hair is lighter because it reflects the sun better which is more energy efficient. [Laughter.] But that was not purposeful.
Senator Shaheen has been a stalwart. Frankly, both of us have
had to work with both of our caucuses on moving this forward because it is a consensus bill. Again, it is a bill that can actually, in
my view, get through to the President for his signature.
We really appreciate your willingness, Madam Chair, to push
that through. I know that you have a personal commitment to this,
but you are also willing to recognize three and a half years of hard
work and over 270 organizations and trade associations and the
fact that this would make a big difference to the equivalent of energy savings that would take 80,000,000 homes off the grid by
2030, cumulative savings, about $100 billion, 190,000 jobs created.
It does a lot of good things. Reducing emissions, cutting carbon
emissions equivalent to taking 22,000,000 homes or 22,000,000 cars
off the road by 2030. It is cost effective, and it adds jobs in places
like my home state of Ohio. The manufacturers are really excited
about it.
We hope this is proof that bipartisanship is not dead on Capitol
Hill because it passed the Committee last Congress with a strong
bipartisan vote of 19 to 3, and I am hopeful we can do that again
this year, get this moving quickly, get that strong show of support
in the Committee which will help us to get it through the Floor and
make this good idea a reality.
Thank you, Madam Chair.
The CHAIRMAN. This is all about taking good ideas and turning
them into law. It is a good thing.
Senator Schatz, you have been very engaged in several different
initiatives. This morning you are going to speak to us about the
Utility Energy Services Contract Improvement Act as well as the
PREPARE Act, Promoting Regional Energy Partnerships for Advancing Resilient Energy Systems Act.
Again, we appreciate your leadership here on the Committee and
know that you are taking that interest to the other Committees you
currently serve on. So, welcome back and we are looking forward
to hear your comments this morning.
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which we all know is the least expensive, most effective way to reduce energy costs.
I am going to take some time to talk about two bills I have introduced that focus on energy efficiency and grid modernization.
The first bill, S. 723, the Utility Energy Service Contracts Improvement Act of 2015, provides parity between two types of energy
savings contracts with Federal agencies. Co-sponsored by Senators
Alexander, Coats and Coons, it is endorsed by the Edison Electric
Institute and the Bristol Bay Native Corporation which has a subsidiary that does a significant amount of work with UESCs.
UESCs are similar to ESPCs. Both are financing vehicles that
allow Federal agencies to invest in efficiency improvements and energy conservation measures to reduce energy use and save money.
The primary difference is that UESCs allow the client to work directly with the utility, an existing relationship, while ESPCs are offered by energy service companies, ESCOs.
Under the current law Federal agencies can enter into energy
savings performance contracts for up to 25 years; however, Congress does not specify guidelines for UESCs leaving the contract
terms up to interpretation. Several agency interpretations have
limited UESCs to only ten years and this has resulted in lost opportunity and significant underutilization and a potential loss of
energy and financial savings to the Federal Government.
Our bipartisan bill does one simple thing. It clarifies that Federal agencies may enter into UESCs of up to 25 years just like
ESPCs provided that the energy savings are measured and guaranteed. It is a simple, common sense bill.
My second bill on the agenda is S. 888, promoting Regional Energy Partnerships for Advancing Resilient Energy Systems Act, the
PREPARE Act. The PREPARE Act is co-sponsored by Senator
Heinrich and has the endorsement of the National Association of
State Energy Offices.
U.S. energy systems and infrastructure are currently in a period
of significant change. The majority of energy assets are ready for
retirement or replacement. Decisions made today will have lasting
impacts over the next 40 to 50 years, and I know Chair Murkowski
knows that as important as national policy is, it is often times public utilities commissions, local utilities, local energy companies,
that make the driving difference in terms of our energy future.
The PREPARE Act recognizes this reality and leverages the DOE
and the national labs to provide direct financial and technical assistance to states and regions that want to strengthen and streamline their energy systems. The bill directs DOE to act as a sort of
consultant to the states, working with key stakeholders to ensure
that planning efforts have the necessary resources and focus.
The PREPARE Act draws on the experience of two successful energy partnership programs. One is the Hawaii Clean Energy Initiative initiated by Republican Governor Lingle and President Bush
in 2008. It is underpinned by an agreement between DOE and the
Hawaii State Energy Office. The second is the DOE State Energy
Program which provides funding and technical assistance to state
energy offices to prepare state energy plans and implement energy
efficiency programs. Since its creation in 96 it has delivered energy
cost savings of over $250 million a year, and this legislation is ag-
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nostic on the direction that individual states and regions should
take with respect to their energy futures. It simply directs the DOE
to utilize its resources to assist in a planning process so that we
modernize our grid and that we have the most efficient and effective energy systems that work for our individual states. It creates
a voluntary program and recognizes the need for long term, holistic
planning.
I want to thank Chair Murkowski for assembling such a good, bipartisan group and for considering this and other excellent pieces
of legislation.
The CHAIRMAN. Thank you, Senator Schatz.
You know, as I listened to your comments and that of the other
members that we have heard so much of this, yes, it is about efficiency. It is also about us doing a good job of understanding what
is out there within our agencies, how we can be more efficient from
just an oversight perspective. Knowing what we have and utilizing
it to its best advantage.
This kind of ties in with what our fourth title in this energy,
overall, energy legislation will be which is accountability, making
sure that what we have in place actually makes sense. What you
have laid out in front of us today is good stuff, and we will look
forward to working with you as well.
Senator SCHATZ. Thank you.
The CHAIRMAN. Thank you for coming back to the Committee.
And now, lets go up north a little bit to Minnesota. Our colleague, Senator Klobuchar, is here to talk about energy efficiency
retrofits and how we can best utilize them to gain efficiencies.
Welcome to the Committee, Senator Klobuchar.
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more energy efficient. We all know it will help them save money
as they help other people.
They also tend to be located in older buildings, thus many of
these nonprofits are faced with a difficult choice regarding investments in energy efficiency. They are often the first to forego energy
efficiency measures that would save money for them in the long
haul because of their costly, up front, capital investments which divert their scarce resources away from the services they are trying
to provide. They really are perfect for these kinds of grant programs, and because of their tax exempt status nonprofits are currently unable to utilize the existing tax credit or rebate programs
even though they would benefit from them.
So what our bill does is it establishes a pilot program at the U.S.
Department of Energy. Grants can be used for up to $200,000 per
building. The costs of it are offset by other Department of Energy
grants and would be subject to a 50 percent local match requirement.
The bill includes provisions to ensure that the projects achieve
significant amounts of energy savings and are completed in a cost
effective way.
It is also important to note that the bill would not score and that
the funds, again, are a carve out of existing resources that are used
for commercial buildings yet we have all these older buildings that
the nonprofits have been using where they have not been able to
retrofit them.
The legislation is supported by a broad coalition of organizations
including the National Council of Churches, as well as the Union
of Orthodox Jewish Congregations of America, the Interfaith Power
and Light, YMCA and there are a number of other faith-based organizations that are big supporters of this.
The bill has a bipartisan House companion. It is being introduced
today by Representative Cartwright, a Democrat from Pennsylvania, and Representative Dold, a Republican from Illinois, and I
think this is an area that has long been overlooked, the ability of
nonprofits to utilize tax credits to retrofit.
I want to thank this Committee for the bipartisan work that
youve done in this area. I think it is actually a very exciting area
for us to move on. We did a few weeks ago, but also to move even
further with some of the bills that are out there, including Senator
Portman, Senator Shaheen, the other one discussed today and all
the work of the Committee members.
Thank you very much.
The CHAIRMAN. Senator Klobuchar, thank you. We all want to
make sure that our nonprofits have what they need, particularly in
times of tough budgets both at the Federal and state levels and the
ways that you can save money is with efficiency, with your energy,
so working with you on this is something that we look forward to
doing.
Senator HOEVEN. Madam Chairman, if I may?
The CHAIRMAN. Senator Hoeven, yes.
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The CHAIRMAN. Well, all I was thinking was that every church
that I go into is always cold. So I know they are saving energy.
[Laughter.] But we warm it up.
Again, to the members of the Committee, I know that each of us
have many pieces of good legislation that are, perhaps, part of the
22 bills that we are considering today. If you would care to make
brief comments now before the Committee or submit something for
the record, we are certainly happy to allow for that.
Senator Gardner.
STATEMENT OF HON. CORY GARDNER, U.S. SENATOR FROM
COLORADO
Senator GARDNER. Thank you, Madam Chair, and thank you for
this hearing today. I think we are doing some great work, and obviously Senator Coons mentioned some of the work that we are doing
together. I commend him for his leadership when I was in the
House and now in the Senate together on Energy Savings Performance Contracts.
The Federal Government is the largest office holder in the country, somewhere around two billion square feet of office space. We
have got $20 billion worth of potential opportunities when it comes
to savings from energy savings performance contracts, reducing
emissions, creating thousands of private sector jobs, saving the taxpayer money. This is that win/win/win/ trifecta that we do not often
get to talk about.
So, again, thank you for your opportunity today. Senate bill 858,
we are still looking for co-sponsors. Anybody can join this. We are
excited to work on energy savings performance contracts, U.S. goes
to the utility side as well as we continue the good work that we
are pursuing right now on energy efficiency and savings.
The CHAIRMAN. Fabulous, we look forward to that.
I still think we can deal with the air conditioning here in this
building and save a lot of money. That is going to be my next pitch.
Senator Stabenow.
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But when you look at the capacity to save energy and reduce carbon from addressing these issues, I really hope this will be at the
top of our list. I think it is really important.
Thank you.
The CHAIRMAN. Thank you, Senator Stabenow.
Thank you Senator Klobuchar for joining us this morning before
the Committee.
Lets now go to our second panel and hear from them this morning on these various measures that are before the Committee.
At this time I would ask Dr. Kathleen Hogan to join us.
Dr. Hogan is the Deputy Assistant Secretary for Energy Efficiency at the Office of Energy Efficiency and Renewable Energy at
DOE. Next to her we have Mr. Tony Crasi, who is here on behalf
of the National Association of Home Builders, and he is the owner
of the Crasi Company Incorporated. We also have Dr. Ted Gayer
with us. Mr. Gayer is the Vice President and Director of Economic
Studies at the Brookings Institute. So welcome to you this morning. We have Mr. Steven Nadel, who is the Executive Director for
the American Council for an Energy Efficient Economy. He has
been before the Committee before. Welcome back. And we have a
friend of mine and fellow Alaskan, Mr. Gene Therriault, who is
with us, who is the Vice Chairman of the National Association of
State Energy Officials as well as the Deputy Director of the Energy
Policy and Outreach for the Alaska Energy Authority. He has come
a long way to be with us, but his insight on not only those Alaska
related issues, but national issues is greatly appreciated and respected. So, welcome to the Committee this morning.
We will begin with you, Dr. Hogan. If you would give us five
minutes or less, know that your full statement will be included as
part of the record, but we look forward to your comments this
morning.
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industrial competitiveness and lower air pollution. And I am very
pleased to be here today and look forward to working with Congress and this Committee in particular to talk about how we can
expand the use of energy efficiency to help address our nations energy challenges.
Ive been asked to testify on 22 energy efficiency bills currently
before the Committee. While the Administration is still reviewing
these bills we certainly do want to express our support for the ongoing bipartisan efforts to promote energy efficiency. And we do
look forward to continuing to work with the Committee with the
range of bill sponsors.
So the Administration does continue its support for the underlying goals of S. 720, the Energy Savings and Industrial Competitiveness Act of 2015 as many of the sections of S. 720 match those
in a similar bill the Administration supported in 2013. Many of the
provisions of S. 720 would support Administrations efforts to
strengthen U.S. competitiveness through significant research and
development investments in manufacturing, innovation and productivity such as the Department of Energys Clean Energy Manufacturing Initiative. And it would complement other Administration
energy efficiency initiatives for our homes, buildings, and industries.
The Department continues to review the changes in S. 720 and
again, looks forward to working with the bills sponsors and this
Committee to cut energy waste, save money and reduce pollution.
The additional bills on the docket today address many important
aspects of energy efficiency today including but not limited to, the
Federal use of energy savings performance contracts, utility energy
savings contracts and Federal energy efficiency efforts more broadly, all of which contribute to reducing the energy intensity of Federal facilities, lowering bills and providing environmental benefits.
They also address energy efficiency for commercial and residential buildings which, as weve heard, consume more than 40 percent
of the nations total energy and actually more than 73 percent of
its electrical energy and of course, continue to represent significant
opportunities for energy and cost savings.
The bills address appliance efficiency standards which are currently saving consumers more than $50 billion annually, and we
know that there are opportunities for additional savings there.
They address reauthorization of the critical Weatherization Assistance Program and state energy program which help low income
households benefit from cost savings as among other benefits, and
they assist states in establishing and implementing programs to reduce energy costs, enhance economic competiveness and improve
the environment.
And they look for opportunities, new opportunities, for energy efficiency activities at the local and municipal levels which is also
something the Administration seeks to address in our budget request through something called the Local Energy Program.
So EEREs program offices are implementing a variety of strategies to improve the efficiency of our homes, buildings and manufacturers similar to the activities highlighted in the legislation before
the Committee today. And expanding R and D to breaking down
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34
The CHAIRMAN. Thank you, Dr. Hogan. Know that we will be
turning to you and your team as we work through the issues, not
only on these 22 different bills, but other matters in the efficiency
realm. We look forward to working with you.
Lets next go to Mr. Tony Crasi. Welcome to the Committee.
Good morning.
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73
The CHAIRMAN. Thank you, Mr. Crasi, and thank you for your
very specific suggestions here this morning.
Lets go to Dr. Ted Gayer. Welcome.
STATEMENT OF DR. TED GAYER, VICE PRESIDENT AND DIRECTOR OF ECONOMIC STUDIES, JOSEPH A. PECHMAN SENIOR
FELLOW, THE BROOKINGS INSTITUTION
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My third point is that for the recent mandates that Kip Viscusi
and I examined we found that although they are frequently advertised as greenhouse gas initiatives in truth their environmental
benefits are quite small and are frequently outweighed by the cost
they impose. We found this result in our examination of a number
of mandates for consumer goods such as clothes dryers and room
air conditioners and others.
The question then is how are these mandates justified if they
yield environmental benefits that are outweighed by their costs?
This leads to my final point.
In order to justify these mandates the agencies assert that consumers and businesses are irrational when buying energy intensive
goods and thus receive massive benefits if the government restricts
their choices. The agencies invoke broad references to the behavioral economics literature to support the claims of consumer rationality but they present little or no concrete evidence.
They also ignore what I think is the key policy implication of behavioral economics which I think is appropriate for the legislation
that you are considering today which is that it is more effective to
address poor decision making by consumers and firms through softer regulatory nudges such as providing clearer information to consumers and encouraging voluntary measures rather than going
straight to using costly mandates that restrict choice.
Given the unpopularity of levying a revenue neutral tax on pollution I fear we are instead opting for mandates that are advertised
as environmental protection but are justified by weak claims of
consumer protection. In other words we are shifting our regulatory
priorities from the goal of reducing the harm individuals impose on
others through pollution towards the more nebulous non-supported
goal of reducing our individuals cost to themselves by purchasing
reportedly uneconomic products.
This shifts results in a host of costly mandates that are less effective than a government policy that simply sets a price on pollution.
To summarize, to the extent that energy prices fail to incorporate
the environmental cost of energy use, I believe the most sensible
approach is to price those costs directly. Mandates are inferior policies but still may be better than doing nothing if the benefits exceed the costs.
Unfortunately by the agencys own estimates many of the mandates frequently lead to minimal environmental benefits that are
less than the estimated cost. But in an effort to justify these uneconomic regulations the agencies have deviated from, what I believe,
are well established economic tenants by asserting that consumers
and businesses are irrational and that they therefore benefit from
government mandates that restrict choice.
I believe the evidence for this view is weak, and assuming that
citizens are not capable of making sensible decisions that affect
their own pocketbooks is not the right way for us to advance the
important goal of enhancing the quality of our environment.
Thank you.
[The prepared statement of Dr. Gayer follows:]
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The CHAIRMAN. Mr. Nadel, welcome to the Committee. Good
morning.
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There are a number of other bills, though, that are also in this
first category of demonstrated bipartisan support such as S. 600,
that Senator Klobuchar talked about earlier and Senator Hoeven,
dealing with retrofits to nonprofit buildings.
S. 623, dealing with utility energy service contracts that Senator
Schatz talked about.
And S. 858, dealing with the energy savings through public/private partnerships that a number of Senators both here and in the
previous panel discussed.
So, that, I believe, should be at the heart of the bill.
There are also many bills that were introduced more recently
and havent had an opportunity to get that strong, bipartisan support. We see six of these bills as potentially falling into this category.
The Smart Building Acceleration Act that Senator Cantwell has
introduced.
The Commercial Building Benchmarking bill that Senator
Franken has introduced that goes a little bit farther than whats
already in S. 535.
Theres the Energy Star Integrity Act that Senator Risch did.
Theres Senator Udalls Energy and Water Efficiency Act.
Senator Markeys Access to Consumer Energy Information Act as
well as Senator Frankens bill on alternative fuel vehicles.
Wed also note there are a couple of other bills that are not in
the hearing today that may fall into this category.
I would also note that there is one bill that we do support that
we are unsure if it will have the bipartisan support.
This is the Energy Efficiency Resource Standard bill that Senator
Franken introduced and that Senator Cantwell mentioned before.
This would establish energy saving targets that electric and natural gas utilities must meet, the target slowly rising over time.
Presently 24 states have such targets and theyve proven to be very
effective at both saving energy and doing so at low cost.
We estimate the energy savings from this bill is about three
times what the Portman/Shaheen bill would do. Ideally we do them
both, but we see that as an important marker about what could be
accomplished with Federal legislation.
Finally Id note that there are a few bills that we have concerns
about as written in current form.
This would be S. 1047 which reviews rulemaking proceedings
and the bills on ceiling fans and furnaces. We think they are well
intentioned but are poorly written and could cause some significant, adverse consequences in their current form. I have some specific written comments about particular problems with these bills,
and Im happy to answer further questions about them.
So with that, Ill conclude my testimony and look forward to your
questions.
[The prepared statement of Mr. Nadel follows:]
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94
The CHAIRMAN. Thank you, we appreciate that, and we will soon
turn to questions after we hear from Mr. Therriault.
Welcome to the Committee, Gene.
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The CHAIRMAN. Thank you, Mr. Therriault, I appreciate your
comments and your good work not only in the state but on behalf
of the Association of State Energy Officials. Appreciate the work.
I think we recognize that we have no shortage of programs out
there that are designed to address some of the efficiencies whether
it is on the state side or whether it is on the Federal side. I think
this has been some of the concern we have heard is how do you
know even where to access? You mentioned collaboration. We need
to streamline. I think these are areas where we would all agree we
have got some work to do.
Some of the bills that we are looking at, such as the proposals
to impose a national energy efficiency resource standard, would result in Federal programs that resemble, somewhat, what we have
in place at the state level. So this is a question to anyone who
would care to engage.
If the states are successfully implementing these types of programs should we, at the Federal level, be duplicating or overruling
their efforts or decisions with a Federal overlay?
We talk a lot about giving flexibility to the states, and certainly
we want to do what we can from a broader perspective to encourage these efficiencies, but are we in a situation now where we are
not giving the flexibility to the states that we need? And instead
working at your end of the spectrum, Dr. Hogan, in an overlay of
Federal policies that may just further complicate matters?
I will ask both you, Dr. Hogan and you, Mr. Therriault, from the
states perspective and the Federal perspective. How do we deal
with this? Because I think this is part of our required review of not
only what we have with these 22 bills, but how we bring about efficiency within our processes so that we make sure that the programs are working.
Dr. Hogan, why dont you begin?
Dr. HOGAN. So I think there is, clearly, a lot more opportunity
for what we can do with energy efficiency. As you point out it does
require, sort of, an effective collaboration across the Federal, state
and local entities as well as engagement with the private sector.
I think your question was specifically around, sort of, energy efficiency resource standards as one tool to do that, and you were
pointing out that many states are doing this.
And I think whats interesting is when you look at the states
that are doing this the benefits that they are getting from their approaches are quite significant. And they are showing that they can
do it quite cost effectively. And then at the same time when you
look around the country you see that other states have a similar
opportunity for energy efficiency but really havent figured out how
to get organized in a way to go and capture as much of it as the
states that are pursuing the energy efficiency resource standards
are.
The CHAIRMAN. But then if we require that then we lose some
of the flexibility that Mr. Therriault has suggested is imperative.
Can you speak to that?
Mr. THERRIAULT. Yes. First of all, NASEO, the organization has
not taken an official stance on energy efficiency resource standards.
I think to the general comment or the question, we certainly do
not want the Federal programs structured that duplicate the state
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efforts. We really are looking for legislation that has a partnership
with states.
In the State of Alaska the work thats being done by the Cold
Climate Housing Resource Center, the Alaska Center for Energy
and Power, have done a lot of work and quite often there is a little
bit of a dance that goes on between those state entities and the
Federal entities to encourage them to partner with the state entities to maybe take the work to the next standard. There may be
a need to assist and partner with the Federal, the state agencies,
to achieve more.
But anything that you can do to prevent the Federal legislation
from just being a duplication of whats going on in so many of the
states would be most welcome.
The CHAIRMAN. It is going to require critical review.
Mr. Nadel.
Mr. NADEL. Yes, just briefly.
The bill, the EERS bill, actually does call for the states to administer them. There are quite a few provisions in there to let the
states have quite a bit of flexibility in terms of interpretation. I
think it is an example of a bill where sometimes something one or
in this case half the states are doing that could benefit the country.
And therefore, Id recommend considering it while recognizing some
of the concerns that you are expressing.
The CHAIRMAN. Understood. I appreciate it.
Senator Cantwell.
Senator CANTWELL. Thank you, Madam Chair.
There are a lot of companies from the northwest, I think some
of them are here today, Itron, Microsoft, Ellstrom, McKinstry, who
are leaders in smart building acceleration. And so I wanted to ask
you, Mr. Nadel and you, Dr. Hogan, about do you see new monitoring and control technologies as another step in incremental improvements in energy efficiency or are they likely to be game
changers, you know, on a whole, in a sense of a whole new set of
opportunities?
Second, much of the technology needed to make buildings smarter is commercially available but development is slow. What do you
think are some of the barriers to increasing that level of deployment?
Either you, Mr. Nadel, or Dr. Hogan.
Mr. NADEL. Okay, I will start. I would lean towards saying that
smart building technology is also smart manufacturing technologies
are more game changers. They take advantage of the information
communication technologies that we all know and now carry in our
pockets and have all throughout our homes and get information to
us or to automatic controls to really, much better, recognize energy
waste in real time and control it.
Were finding energy savings of 15 to even 50 percent, depending
on the application people are using. So it is much more than incremental.
Id also note that it makes possible a new set of programs where
you can start much better monitoring the energy savings in real
time and pay for performance rather than just pay as a percent of
how much it costs or what you think it may get. So I do see these
as game changers.
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I think, to pick up on your second question, consumers are not
investing in these yet. Theyre relatively new. They do not know
about them. Theyre improving. Theyre not sure they trust them.
So I appreciate the fact that your bill, S. 1046, would set up a
number of programs, do case studies, work with the Federal Government so we can both save energy, but use the Federal case studies to demonstrate to other people what is possible would help leverage other programs such as DOEs Better Building Challenge to
help promote smart building technologies as well as leverage our
national labs and have them do applied R and D where it is needed
to address particular barriers.
So these are the types of things that need to happen with any
good energy saving measure, but smart buildings included.
Senator CANTWELL. Dr. Hogan?
Dr. HOGAN. And at the Department we look at the opportunities
for smart buildings and Ill take the opportunity to extend that to
smart manufacturing as well as game changers. Sort of a new generation of low cost sensors that give you the opportunity to take advantage of the equipment that you may already have and really
make it work at optimum performance offers huge opportunities for
energy savings in a very low cost way.
And certainly we are doing a lot of that work through a number
of the national laboratories right now including up in the Pacific
Northwest. And we are very excited about what is going on.
I think some of the barriers include that we need a next step in
some of the low cost sensors, really making them as low cost as
they can be as well as some improvements in the communication
protocols and, sort of, the interoperability of things. And again,
road maps that we are working to develop at the Department and
really look forward to putting to work and would look forward to
working with you on a bill that can really help make this happen.
Senator CANTWELL. Thank you.
Mr. Crasi, you look like you had something to say and, Mr.
Therriault, I do not know if you have any thoughts about building
performance issues or particular projects that you think might be
targets for this kind of thing?
Mr. Crasi.
Mr. CRASI. Yes, Maam. Thanks for the opportunity.
Here in Washington with the National Association of Home
Builders, Ive been involved with the technology of home automation and the progression Ive watched over the last, say, six or
seven years. And what we find is one of the most sought after
items in technology is a smart home that controls your heating,
cooling, your energy output.
And I think it is a wonderful opportunity and it doesnt need to
be expensive. And you had asked about the barriers and thats
what caught my attention is one of the big barriers are, is, the lack
of a consistent platform across all the different manufacturers. And
once you solve that problem all the systems start to talk to each
other because theres a huge reluctance.
Somebody had just mentioned the reluctance of consumers to
jump in it is because what happens is you have conflicts between
the different systems. And they get frustrated and they stop using
them.
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But we, I am part of a nonprofit that produces very affordable
housing. And to prove a point, I got one of the national guys involved and he put in, for $1,500, he put in an entire system in a
$100,000 home that controlled the heating, it controlled the lighting. It controlled security, everything. Just to prove a point, it can
be done. But if you ask about those barriers, one of the biggest barriers is getting those platforms to work with each other.
Senator CANTWELL. Well, we would like to see that house, but
interoperability is a big issue. The reason I am asking this question
is because 40 percent of our energy use is in buildings and so if
you key in on this then you can get some of these savings that you
are talking about, 15 to 50 percent. That is pretty big.
I know our time is expired, but maybe you could, for the record,
tell us some of the things that might be helpful in Alaska.
Mr. THERRIAULT. Certainly, through the Chair.
Certainly in Alaska where the space heat really is the critically
energy demand on a yearly basis for commercial buildings and residential. And so being able to have the systems in any building
work with each other to get maximum efficiency is ideal.
I think, Madam Chairman, thats one of the areas that, again,
the Cold Climate Housing Research Center at the University of
Alaska is looking at ways to bring the latest technology into the
northern application and make it work as best as possible.
One of the things that we have to continually keep a focus on
though is making it as simple as possible. When you are talking
about taking technology and putting it out into a very small village
and having it where it can be maintained, understood, fully utilized, it has to be not only cost effective, but also something that
is easily understood. And so thats one of the things that I think,
again, some of our local research would be good information back
to the industry that is developing this to make it so that it is really
inherently useable in a situation like the State of Alaska.
The CHAIRMAN. Senator Flake.
Senator FLAKE. Thank you. Thank you for the testimony.
Let me begin talking about a bill that I have introduced with
Senator Booker. It is S. 939. It responds to the GAO study, a recommendation that Federal agencies evaluate the 94 green building
programs that span 11 Federal agencies to try to determine if there
are opportunities for consolidation and reducing duplication.
I want to thank Senator Portman for joining me in an amendment that we had through budget resolution, amendment number
822 which also provides for a reduction in duplicative programs.
I think when GAO, which is obviously a nonpartisan, independent agency, provides a recommendation on how government
can become more efficient we ought to take heed and we need to
look hard at these recommendations. In this case GAO made the
recommendation in 2012. This legislation I have introduced with
Senator Booker would make just a very modest step to ensure that
these recommendations are considered.
But to Dr. Hogan, can you talk a little about DOEs capability
to evaluate these green building programs and to identify areas
that mightareas for consolidation or improvement?
Dr. HOGAN. Certainly.
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The Department of Energy has capabilities to look at programs.
I think the Administration, sort of, more broadly has approaches
to ensure that the programs across the Federal Government are
well coordinated.
I mean, I think I can also speak to the programs that we run
at the Department. I think most of the ones that are in your
amendment that are within the Department actually reside under
me. So I think I can speak quite well to how well and how committed we are to ensure these are effectively coordinated and that
they do have separate but complementary missions that are all
doing what it is they are supposed to do with the Federal taxpayer
dollar.
Senator FLAKE. 94 green building programs scattered across 11
agencies. My guess is that GAO is right that we need to consolidate
and eliminate duplication here.
Dr. HOGAN. Well, what I would love to do is first, perhaps, start
with the Departments programs and come up and show you and/
or your staff, sort of how we are strategically orienting the programs that we have to meet sort of the missions they have and how
they complement each other.
Senator FLAKE. Well, thank you. We would appreciate that. And
do you have any thoughts on the other agencies? Are they as
proactive as you are? I know most of them reside under your agency, but
Dr. HOGAN. I think I do not know the number. It sort of depends
on how you count here.
You know, a fair number of them are under the Department of
Energy. But certainly there are programs.
But, you know, I am happy to engage in a conversation with everything that we know with you and your staff about the programs
as we look at that GAO chart and how they complement each
other.
Senator FLAKE. Alright, I appreciate that.
Mr. Nadel, I want to ask you about Section 433 of S. 720. In this
section the HUD Secretary is directed to issue underwriting guidelines to require banks to adjust the mortgage applicants income
and artificially increase the appraised value of the property based
on the predicted energy cost savings, the so called SAVE Act. Especially in light of the financial crisis we had in 2008 which was partly a result, I think, of us trying to meddle in underwriting standards.
Do you have some concerns about this? Do we really understand
the mortgage markets enough to try to mandate and artificially increase or increase appraisal values when the market isnt doing it?
Mr. NADEL. Okay. Yes, we do support this bill. I noticed that
NAHB also noted that they support this bill. We think there is a
lot of good data indicating that if you reduce the energy use and
therefore if you have more money in the homeowners pocket, they
can afford a larger mortgage. There, in fact, are a number of independent studies showing that the default rates are lower for highly
efficient homes than less efficient homes.
We certainly recognize you have to be very careful with the underwriting standard, and we are only supporting this bill and advo-
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cating it along with NAHB and the realtors and others because
there is a good, firm basis of empirical evidence that this can work.
Senator FLAKE. Well, you were referencing one study. I know
there is one study that indicates the default risks are lower in energy efficient homes. This was conducted by the Institute for Market Transformation, a DC-based, nonprofit, dedicated at promoting
energy efficiency.
I am not entirely sure that we ought to rely on one study like
this when the markets, I mean, we are basically saying the markets are not recognizing this. We are going to tell the markets
what to recognize. I always get scared when government does that.
I think there is history, that cautions us in doing that. Does anybody have any caution there?
Mr. Gayer, you are an economist or do you dabble in that kind
of area? Do you have any caution there?
Dr. GAYER. Caution on what in particular?
Senator FLAKE. In terms of telling the agencies that deal with
these home loans to artificially increase the appraisal value of the
house or change the underwriting standards to account for more
energy efficient homes.
Dr. GAYER. I do not know the specifics of it, but certainly when
you are changing the appraisal and underwriting weve all learned
the lessons of what weak underwriting can accomplish for the economy since 2008.
Senator FLAKE. Well, that is my concern as well, and I hope we
will be careful moving ahead and base this on more than just a
study by a one nonprofit organization. I think the markets are typically smarter than we are here, and if they do not recognize the
value, we need to be careful in trying to assign a value to this. So
that is my concern. Thank you.
The CHAIRMAN. Thank you, Senator.
Senator Franken.
Senator FRANKEN. Thank you, Madam Chair.
I want to revisit the energy efficiency resource standard because
I think it is the way that we can most effectively reduce our energy
use. 24 states, including my state of Minnesota, have already
adopted the Energy Efficiency Resource Standards which require
electricity and natural gas utilities become a little more efficient
each year. That is 24 states. Scientists tell us that is almost half
our states. [Laughter.]
If we adopt a similar standard at the Federal level we would unleash the manufacturing and deployment of all kinds of energy efficient products throughout the economy and that would reduce not
only our energy use, but also peoples electricity bills across the
country. I am a supporter and co-sponsor of Shaheen/Portman, but
since the Committee is now looking to do a comprehensive energy
bill we need to have a conversation about what comprehensive energy efficiency looks like, and I believe that a central piece of that
is the energy efficiency resource standard. I want to thank the
Ranking Member for mentioning it and thank the Chair for bringing it up for discussion in her questions.
Mr. Nadel, it is actually kind of remarkable that while Congress
has been sitting on the sidelines about half our states have imple-
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mented energy efficiency standards. Can you give us a broad overview of how these programs are working across the nation?
Mr. NADEL. They generally are working very well. Basically the
states have set their goals. They typically increase gradually over
time. The utilities then offer energy efficiency programs to their
customers whether they are homeowners or businesses to help
them to improve energy efficiency.
Its technical assistance. Its helping to improve stocking of efficient products. Sometimes it will be financial incentives to pay a
small portion of the cost to make it more attractive so the customers then buy those measures.
But weve done an evaluation of those studies. And on average
all of the states are exceeding the targets. Many times they are
saving more than the targets mandate, and they are doing so very
cost effectively. Typically benefit cost ratio for these utility programs are two to one or even three to one.
Senator FRANKEN. To me this is a perfect example of the states
as laboratories, as the founders really envisioned. And the laboratory has got a positive. [Laughter.]
You know, eureka, they were saying on all these states.
Dr. Hogan, would you agree that these are working at the states,
the state level?
Dr. HOGAN. Yes, from everything we have looked at we see great
results coming from the efforts of the states in this area.
Senator FRANKEN. So and your organization has estimated the
energy savings. What would we see if this were adopted as outlined
in my new bill, S. 1063, as they compare to all of Shaheen or
Portman/Shaheen?
Mr. NADEL. Right. We analyzed both of them in 2013. In 2013
we found the savings from your bill, the ERS was about three
times what Shaheen/Portman would save. We would like them
both. We like the total of
Senator FRANKEN. So instead of 22,000,000 cars off the road,
with this there would be 88 together?
Mr. NADEL. Yes, about. And very large financial savings, we estimate net savings to consumers and businesses would be over $125
billion as a result of this.
Senator FRANKEN. So as happy as we are when we are
celebratory and dancing around as celebrating ourselves on Shaheen/Portman or Portman/Shaheen. Whoopee, yea, yea, yea,
22,000,000 cars. Think about 88,000,000. Wow.
Anyway. [Laughter.]
I do not have enough time to really bring up my benchmarking
bill, but we have done that on leasing Federal buildings or buildings leased by the Federal Government. Now I am talking about
commercial buildings. Everybody think that is a good idea? Is there
anyone who does not? Okay, benchmarking is good. That is a good
idea.
I am out of time, so I wont talk about my energy service performance contracts on alternative vehicles except, as I am talking
now, and going over my time. [Laughter.]
I think it is a splendid idea, but I am out of time, so I will not
continue to talk about it. [Laughter.]
The CHAIRMAN. Thank you very much, Senator Franken.
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Senator FRANKEN. Thank you.
The CHAIRMAN. I appreciate that.
Senator Warren.
Senator WARREN. Thank you, Madam Chairman.
Energy efficiency technologies can be a pretty good deal. I was
thinking about this. It seems to me they are a three-fer. They protect the environment. They fight climate change. They save money
for consumers.
Actually maybe I should say it is a four-fer because the energy
efficiency industry is creating a lot of new jobs, good jobs, in Massachusetts and elsewhere across the country.
Last Congress Senator Crapo and I introduced legislation to encourage the use of technologies that allow businesses to operate
their buildings and their equipment in the most effective way and
energy efficient ways, from light sensors that turn off lights when
nobody is in the room to software that optimizes a companys shipping routes. Businesses can reduce their costs and protect the environment simultaneously.
Now we know that these programs work, but without a definitive
study quantifying cost savings, businesses have had a hard time
weighing the costs against the benefits. Without good data they
have been slow to embrace some of these tools. So I will soon be
introducing a bill to direct the Department of Energy to conduct a
study showing exactly how much money businesses and governments can save by adopting various technologies.
I wanted to start though by asking you, Dr. Hogan, can you talk
about how quantifying the cost savings from energy efficiency technologies can encourage more businesses to adopt practices while
protecting the environment?
Dr. HOGAN. Certainly. I think being able to demonstrate packages of technologies from what they cost and the savings they deliver over time is one of the key tools that we have to demonstrate
to the private sector the types of things that are there that are
working and that they can go on and embrace. So very effective.
Senator WARREN. Good. Can I just ask you, Mr. Nadel, do you
believe that proof of the bottom line benefits of these operational
efficiency, energy efficiency, technologies would encourage more
businesses to adopt them?
Mr. NADEL. Absolutely. Many businesses are leery of new
unproven things. They are very busy, and you really need to show
them concrete evidence this will work in their application for them
to get comfortable.
Senator WARREN. Good. Thank you. And Mr. Therriault, can you
talk about the importance of quantifiable benefits in your work to
encourage the adoption of energy efficient technologies?
Mr. THERRIAULT. I think across the nation and in different states
and certainly in the State of Alaska, when it comes to energy efficiency improvements in residential structures and also as weve actually teed up legislation in our legislature this year for PACE financing which is a mechanism to help businesses implement energy efficiency at their businesses.
In all of those the effort starts with an audit of the house or an
audit of the business, and then an estimation or showing that
theres a business plan that the savings would be enough to make
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the payment and hopefully, actually, result in positive cash flow
immediately for the business. And then there, in the PACE legislation that we introduced this year, Governor Walker introduced this
year, is patterned after a Texas bill which passed about a year and
a half ago. There is then a follow up audit to make sure that the
technology was installed correctly, is operating correctly and the
savings actually are being achieved.
Hopefully those efforts then, along with any kind of information
from the national labs that show the technology and the use of
technology and the success of technology starts to build on itself.
And in the State of Alaska I know with our residential work our
Alaska Housing Finance Corporation is the one that gathers all
that data, is able then to present it back to the national and first
national programs and also to our state legislature to show that we
are achieving the goals. And that word starts to spread. It really
starts to snowball.
We have seen it happen with residential energy efficiency improvements, and we believe we are on the precipice of kicking it
off for businesses.
Senator WARREN. Well, thank you Mr. Therriault, you speak to
the heart of someone who is a data nerd.
Energy efficiency programs, I think we all agree, are critical to
reducing carbon emissions and fighting global climate change. We
have the technology that can reduce carbon emissions while simultaneously driving down costs for businesses and consumers.
It seems to me this is a place where the Federal Government can
make a real difference, not by regulation, not by spending money,
but providing data for evaluating the dollars and cents benefits of
different technologies.
I look forward to working with all of you to finding ways to improve energy efficiency, save money and preserve our heritage.
Thank you, Madam Chairman.
The CHAIRMAN. Thank you, Senator Warren. Senator Hoeven.
Senator HOEVEN. Thank you, Madam Chairman, and thank you
to all of our witnesses who are here today. Thanks for holding this
hearing on energy efficiency.
I have introduced two bills and co-sponsored a third with Senator
Klobuchar aimed at addressing common sense energy efficiency reforms. We had an opportunity, Senator Klobuchar was here earlier,
to talk about that bill which I appreciate very much. And we have
a lot of support from a lot of nonprofit organizations. We believe
it would be a very helpful piece of legislation for us to pass.
The other two that I want to mention, briefly, is first the Federal
Building Energy Efficiency bill. Essentially this goes to Section 433
which is a requirement that the use of fossil fuels be phased out
in all Federal buildings. The legislation I have submitted is bipartisan legislation. Co-sponsors include Senator Joe Manchin and
Senator Donnelly of Indiana. This legislation would essentially
allow us to continue to use fossil fuels in Federal buildings, but we
keep the goal of energy efficiency. So what we say is that you could
use whatever source of fuel, but you still need to meet these energy
efficiency targets. It accomplishes the purpose of the legislation but
it just says, you know, you can use whatever fuel source to get
there as long as you are still meeting these efficiency goals. I think
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that is why we have bipartisan support. I think it is very common
sense legislation and hope to get, like I say, good bipartisan support to pass it.
So I ask for unanimous consent to add a support letter from 22
energy efficiency organizations to the record.
The CHAIRMAN. So noted.
Senator HOEVEN. These include the Alliance to Save Energy, the
National Rural Electric Cooperative Association, Fuel Cell and Hydrogen Energy Association. And like I say, many others. So if I
could ask you to add that to the record which you have agreed to,
I appreciate it very much.
The second bill I would like to mention and then I will turn to
Mr. Crasi for comment, is the Furnace Fix bill. I have introduced
this with Senator Lamar Alexander of Tennessee which would address concerns regarding the DOEs recently proposed regulations
on furnace energy efficiency.
What it deals with is this new requirement that DOE is putting
forth that you cant vent a furnace out the top of the roof or the
chimney. You have to essentially vent to the side. This is a piece
of legislation that would address that regulation they are imposing,
again, in a way, that I think is common sense.
So I ask for unanimous consent to add a support letter from six
national organizations including the National Association of Home
Builders, the America Public Gas Association, ACCA, the Indoor
Environment and Refrigeration Institute and others to the record.
The CHAIRMAN. They will be included as part of the record.
Senator HOEVEN. Thank you, Madam Chairman.
I would now like to turn to Mr. Crasi. In regard to this legislation, Mr. Crasi, how will the Energy Departments proposed furnace regulation affect home builders like yourself?
Mr. CRASI. It is a very good question. As a new home builder
theres virtually no impact because we design around a new system. We havent installed an 80 plus furnace, I cant remember the
last time weve installed one. But the challenge comes with the unintended consequences.
Senator Murkowski, you mentioned in the beginning, is that in
a retrofit, especially in a townhome situation where you might have
a slab on grade type of a unit, maybe sandwiched between three
other units. In a slab on grade generally whats happening is that
the heating unit is usually in the center of the unit, and then in
many cases you have vaulted ceilings.
What happens is that the question becomes if you cant go up
anymore how do you replace that system and go out because
theres no way to do it.
I can give you a real life example. My first home was a three
family, 1863 home. When I started to learn about efficiency, when
I first bought it we put an 80 plus furnace in. It was 1980 something. And when I went to retrofit this about two years ago with
a 90 plus furnace I said well, theres no way I am going to put an
80 plus back in there.
And then I looked, I go, well how am I going to vent this now?
Knowing what I know about paybacks and so forth I did do that,
but it cost me an additional $800 to redo my bathroom. I had to
rebuild a shower because it was the only way to get it out.
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So what happens is that the payback literally doubled. So instead of a six or seven year payback it became a 12 to a 14 year
payback, and then if you go down south where theres virtually no
payback it becomes very challenging.
So I would say that the unintended consequences to be very cautious in that bill or I should say, be very cautious of that particular
rule.
Senator HOEVEN. So it is a rule that could pose significant expenses, particularly on low income individuals that they would
never be able to recoup?
Mr. CRASI. Absolutely.
Senator HOEVEN. Okay. Thank you, Mr. Crasi, I appreciate you
being here and I appreciate your testimony.
Thank you, Madam Chairman.
The CHAIRMAN. Thank you, Senator Hoeven.
It goes to a point that I think there is a lot of discussion and talk
about well, I want to do more. I would like to have an upgrade to
the appliances or just weatherization, but it is the upfront cost and
that is what seems to stop people, seems to stop so many from
going further with that.
As we deal with some of these issues and do the cost benefit
analysis we can say well, okay, that payback time may be a little
bit longer for me. I know that I should do it, but I do not have the
resources available today and particularly for those lower income
families, those middle income families who, quite honestly, look at
their utility bills and want to be able to drive this down.
Former Senator Therriault and I grew up in a town where energy costs in Fairbanks, Alaska are extraordinarily high right now.
If you tell people that they can reduce their heating costs, their energy costs, they say sign me up today. But it is this upfront commitment that I think stalls out so many from these newer technologies.
So questions to you and I guess I will throw it out to you, Mr.
Therriault. From the state side we have a few programs that can
help. Obviously within the weatherization programs we have the
Weatherization Assistance Program. We have got LIHEAP that is
there to help low income families with their high energy bills. But
in terms of those programs that can really help families get into
these new technologies, what do we have out there on state side
and on Federal side?
Mr. THERRIAULT. Well, Madam Chairman, I know that in the
State of Alaska some of the LIHEAP money, sometimes, is utilized
to help upgrade furnace technology in a home. It can be used that
way, so that is beneficial.
I think that just with reference to the issue of the venting of the
furnaces certainly in a state where space heat is such a critical
part of the overall energy picture on a yearly basis. Were going to
get full utilization out of that furnace and going to be able to amortize that additional cost of the venting. But certainly as a state, a
northern state, we represent, understand that other states, the
southern states that that payback would be very long term and actually, may be, a deterrent from the home or even, you know, upgrading or it could actually encourage them to switch to electric
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heat which could be a less efficient form of energy in the first
place.
So that issue of unintended consequences, I think, really does
have to be taken into consideration.
And I am sorry, I got off here. Your main question?
The CHAIRMAN. Well, I was speaking to where a homeowner can
go. Where do you go for that level of assistance to help with some
of these upfront costs?
Mr. Nadel, ACEEE looks at all of this energy efficiency, these
measures that are out there to look at the cost benefit to the various efforts. I do not know, do you look as you are doing a cost benefit analysis? Do you look to what that upfront cost is and how
much of a hindrance that is to even moving forward?
Mr. NADEL. Yes, we definitely do, and we are strong proponents
of energy efficiency financing, create financing to help homeowners
and businesses address this upfront cost because most people do
not have, you know, five thousand, ten thousand just sitting
around ready for an upgrade.
But Mr. Therriault mentioned PACE. Quite a few states have
been implementing commercial PACE laws to address this. Theres
also an opportunity for residential PACE.
And in California they are doing an experiment where the state
is putting up money to make sure that it doesnt have adverse impacts on mortgage repayment rates. And as a result, get lots of
data. If it has adverse impacts the State of California will pay, end
of subject. If it actually pays and hopefully there are some information here that other states can be using. On bill finance is another
approach.
So theres a lot of very creative approaches. Our organization actually sponsored an annual energy efficiency finance conference to
bring together the financiers, utilities, the retrofitters, etcetera, to
figure out how best to work it. But I agree with you, it is extremely
important.
Mr. THERRIAULT. Madam Chairman?
The CHAIRMAN. Mr. Therriault, and then we will go to Dr.
Hogan.
Mr. THERRIAULT. Yes, just on the issue. Certainly being from
Fairbanks, Alaska and still having family in Fairbanks, you know
the issue there, and we are really confronted with that upfront
cost. Trying to encourage people in that community to switch over
to natural gas as the state has got this program to bring a larger
source, make more natural gas available and really build out, rapidly, a gas distribution system.
Were trying to take the second largest metropolitan area and
really change them over to natural gas as quickly as possible, but
that upfront cost for an individual home can be ten or eleven thousand dollars. And so we have looked across the nation to other programs that states have used.
That is why PACE legislation was introduced this year where
you can help businesses convert to natural gas because that conversion, because natural gas appliances are so much more energy efficient than the fuel oil, does qualify as an energy efficiency step.
And so we are putting PACE, weve teed up PACE as a financing
mechanism to be put into place. No cost to the state.
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It is a tool basically for local governments to use involving local
lenders, and it is voluntary for the businesses. But we believe it is
an attractive enough mechanism that it helps those businesses get
over that initial hurdle.
For residential situations, on bill financing, allowing that for the
utility to help finance the individual residential conversion is a tremendous tool. We have done surveys and focus groups and found
out that the benefits that are provided through on bill financing
are very attractive to consumers much more so which is surprising
then the actual interest rate thats charged on the financing.
So we have looked across the nation. Were learning from other
states, what other states have done, so we can apply those different
mechanisms, hopefully at very low cost to the state government or
no cost. But I think there is a potential rule where some dollars
can come through, they might be state energy program dollars that
could actually provide a loan loss guarantee on some of those loan
mechanisms that could be very meaningful.
So again, there are things that can be done and believe you, me,
we are looking at all of them in the State of Alaska.
The CHAIRMAN. Yes, I appreciate that.
My time has expired. Let me turn to Senator Cantwell.
Senator CANTWELL. Thank you, Madam Chair, and I am sorry I
had to step out for a few minutes.
Mr. Crasi, I wanted to ask you about part of your testimony in
Section 443.
Well, first, Mr. Gayer, do you support the Shaheen/Portman bill?
Dr. GAYER. Yeah.
Senator CANTWELL. Okay. Part of that Shaheen/Portman bill, the
SAVE Act, would direct HUD to issue updated underwriting guidelines to allow borrowers to voluntarily submit home energy reports
on their home. These reports could then be used to adjust the mortgage account for a homes energy use. Wouldnt this proposed voluntary policy of accounting for energy efficiency increase the interest of homeowners and home buyers in efficiency?
Mr. CRASI. Absolutely, it would. In any situation where you can
incentivize a homeowner to do better rather than mandating it, as
Dr. Gayer was saying, okay, you are going to get buy in. And a typical homeowner, a consumer is pretty smart. They know what they
can afford. They know what their budgets are.
And with the SAVE Act if you incentivize by allowing banks to
take into account the lower utility bills, theres part of your answer
in how you afford. How do you offset some of that upfront cost? You
do not necessarily have to raise the cost of the home or increase
the cost of the loan. But if somehow the banks were allowed to reduce the payment based on utility prices, youve got built in savings.
I think it is a very good idea because thats whats missing if you
look at the 2012 code. It is not been adopted across the country because of cost effectiveness. And so what happens is that you have
a code that, in its sense is a good code, but people look at it and
say it looks just too expensive.
So if you start to incentivize rather than mandate, I think youll
get better buy-in and ultimately what you end up with is a more
efficient use of energy in this country.
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Senator CANTWELL. Well, Mr. Nadel, do you think there is a
sweet spot here between energy efficiency and housing affordability
or is it all good across the board?
Mr. NADEL. No, there probably is a sweet spot. We have to pay
attention to what is affordable. I think the key issue, particularly
when it comes to building codes and building new construction is,
since basically everybody finances their new home through a mortgage, you need to look at if you increase the cost for energy efficiency how much will that increase the mortgage payment and
make sure that the monthly energy savings are greater than that.
Current mortgage rates that will work out to be in the current
code, the 2012 or even the 2015 code is quite cost effective. Pacific
Northwest Lab in Richland, Washington did that detailed study
and found that in general the first year mortgage costs are going
to be less than the energy bill savings. So I think thats the sweet
spot.
Senator CANTWELL. Thank you.
Thank you, Madam Chair.
The CHAIRMAN. Thank you.
Senator Portman.
Senator PORTMAN. Thank you, Senator Murkowski.
And again, I appreciate your willingness to hold a hearing and
also your personal commitment to this issue from the start and
your strong support for the legislation that has been to the Floor
a couple times now and got to this Committee with a 19 to 3 vote
last time. I think it is a demonstration of how much bipartisanship
there is around at least some of these issues and specifically S.
270.
Senator Shaheen talked about it in detail earlier, so I wont go
into detail except to say that some of the things we heard about
today, the ESPCs, certainly, the nonprofits, you know, we would
like to include in the legislation. We are working on some of the
ESPC issues in terms of the cost. The CBO scoring now helps us,
the nonprofits.
I appreciate the fact that Senators have been willing to work on
lowering some of the costs there and being sure we have offsets
that we can defend as we do with the other offsets because the legislation does not have a cost. It does not have mandates, and thats
one of the reasons weve been able to get these big votes and get
it to the Floor a couple times. So, again, I really appreciate the
support of that legislation.
The legislation, we now have almost 300 groups and trade associations supporting it. I was glad when Senator Cantwell, who has
been a great supporter of energy efficiency, asked Dr. Gayer whether he supported it or not because I was not sure. When you said,
yes, I was like, okay, now I know everybody on this panel supports
it. [Laughter.]
But
Senator CANTWELL. It is a love fest today.
Senator PORTMAN. Yeah, but thank you for asking him because
I did not have the guts to do it. [Laughter.]
But ACEEE, Steve, you guys have been unbelievable in providing
data around this because it is easy to talk about this in general
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terms. It is harder to get specificity, and that has been very helpful.
And NASEO, Gene, you guys have been at this for four years
now, supporting the legislation. I know you would like to see even
more in some areas, and some of the stuff you are doing in the
state that you just talked to Senator Murkowski about is very exciting.
We appreciate that, and we are going to need all the support we
can get. It is not easy to get things done around this place, but if
you have that kind of momentum, I think it can really work.
Tony, thank you for coming back again. You are a glutton for
punishment getting into this issue. I know it is not always easy,
but you have been a great partner for us. As you said, we brought
you in as a stakeholder, and you improved the legislation. We
made some major changes to the legislation based on your input.
I appreciate your strong support of the SAVE Act. I think that has
helped the legislation, not just gain support, but actually have a
bigger impact in terms of 40 percent of our energy going into buildings and this notion that Steve and Ted have talked about in terms
of the homeowner and how do you make this not a mandate, but
makes this an incentive to be able to do the right thing. And incentives are certainly out there.
To Dr. Hogan, you guys supported S. 270 last Congress. I appreciate your looking at the legislation again. You will like it even
more, trust me. Just say yes. No. [Laughter.]
But really, you guys have been terrific partners in this, and we
have made some changes, as you know, based on some of the
things that you want to do administratively. I do think it is fair
to say and you tell me, but that we are trying to codify some things
you would otherwise like to do in terms of coordination and streamlining. Is that accurate?
Dr. HOGAN. The devil is in the details, but I think, yes, thats accurate.
Senator PORTMAN. Yeah. I mean we did talk earlier about the
fact that there is a need for more coordination and of some of your
programs and the advanced manufacturing provisions, for instance,
I think you all support because of that. So we will continue to work
with you, of course, on that.
Today we do have this one bill, 535, that is being signed into law.
Again, Tony, thank you for your support of that legislation. It does
help in the Tenant Star program, and I think has great potential
in the commercial building side.
The one question I guess I would have for Mr. Nadel in terms
of the analysis of the impact of this bill. You mentioned 190,000
jobs. Can you tell us how you got to that estimate of the legislation
and maybe tell us a little more how we should describe that?
Mr. NADEL. Okay.
Yes, thatsour analysis of the 2013 legislation with some adjustments. We are planning as soon as this Committee marks up
their bills, to do an updated analysis on all of these bills so they
will be probably some changes.
But in terms of the jobs, we do, we have a detailed input/output
analysis model of the U.S. economy. So we look at what the costs
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are at each of the sectors, what the benefits are of each sector and
how that works through in terms of the overall economy.
Our estimate is net jobs, meaning how much do youjobs are
created as a result of the savings, but minus the fact that if you
use a little less energy, you are costing some jobs. So those are net
jobs, and we feel very importantly that you really have to look at
it in a net basis. Some of the studies just look at one side and forget the other side, but it is a detailed model of the U.S. economy
and detailed analysis of each provision in terms of how much it will
save in cost each year.
Senator PORTMAN. Great. Well, we would appreciate the additional analysis based on whatever new legislation there is and specifically giving us all the background so we can describe better to
our colleagues, frankly, why this is not just about fewer emissions
and helping in terms of the energy side. It is actually a jobs bill,
and it will create more activity.
The one thing I think your analysis does not fully appreciate and
cant easily do is just the impact on competitiveness. I hear this in
Ohio constantly, that these companies are competing with companies in Japan and Germany and elsewhere that, for years, have focused more on efficiency because they have had higher energy
prices, frankly.
Now we have the opportunity to be able to provide some technologies that we enable them in part through the DOE to work
with a competitive advantage.
So again, thank you, Madam Chair, I really appreciate it.
I will repeat what Senator Shaheen said, we really want to mark
up our bill again, and we have done it twice. It is gotten to the
Floor twice. We know that we have the formula. We have these 300
groups behind us. We want to include whatever good legislative
ideas there are, but we also want to keep this as a bipartisan
measure and one where we can find common ground. Thank you.
The CHAIRMAN. Thank you, Senator Portman.
Senator Franken.
Senator FRANKEN. Thank you, Madam Chair.
I agree, Mr. Nadel, your data is very, very appreciated. How
much, again, would the energy efficiency resource standards help
save in regard to taking, say, cars off the road in relation to the
previous Shaheen/Portman or the Shaheen/Portman as it existed
before?
Mr. NADEL. Alright. Just to reiterate as I said before we very
much support Shaheen/Portman.
Senator FRANKEN. Yes.
Mr. NADEL. And wed like to take Shaheen/Portman and add to
it the savings from the EERS bill. But the savings from the EERS
bill are about three times. I have not checked the car calculations
right here.
Senator FRANKEN. Okay.
Mr. NADEL. But it is, I would add about three times.
Senator FRANKEN. I was just trying to make a point.
Benchmarking is essential for improving energy efficiency in our
buildings unless we really know how much energy their buildings
are using we cannot be sure how much energy will be saved from
using energy efficiency technologies.
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I am proud that my benchmarking bill was included in the Energy Efficiency Improvement Act which the President is signing
later today. That bill will require commercial buildings that are
leased by the Federal Government to benchmark and disclose their
energy use, and this energy data will help the Federal Government
identify the most cost effective ways to reduce its energy use.
But today I want to talk about a new bill which you mentioned,
S. 1052, which would support policies and incentives at the state
level to encourage more commercial buildings to participate in
benchmarking programs. We have adopted this in Minneapolis.
Some other cities around the country have already started commercial building benchmarking programs. Mr. Nadel, can you talk
about how well these programs are working?
Mr. NADEL. Yes, these programs are working very well. Theres
about a dozen cities that are making data available to building
owners so they can identify their worst performing buildings and
target their efforts. In many of the cities they make the data available so energy performance contractors can see which are the less
efficient buildings and target them for marketing.
Theres also useful data for would be purchasers or renters so
that they know what the energy bills may be because to over generalize on average, you know, the mortgage cost is typically the
number one cost. But energy costs are right up there with taxes as
number two, varying very much from building to building jurisdiction to jurisdiction. So this would help.
I would point out that the bill that is being signed today in addition to Federal buildings also has Department of Energy conducting a study on benchmarking disclosure best practices. So that
will provide some very useful information to other cities. Atlanta
and Portland, Oregon just in the last two weeks have adopted similar laws but hopefully this will be useful for others.
What I like about your new bill is it includes two additional provisions. One of which was also in Shaheen/Portman but got left out
by the House, the other of which is new, the one that has small
matching grants available to utilities and utility regulators to figure out ways to better aggregate energy use data so that a building
owner can get the full energy use of the building. Now they can get
the energy use on their meters, but they have no idea how much
is used by the tenants. Aggregation allows the utilities to combine
them all together, protecting privacy, but you get the total of your
hundred apartments or your eight different tenants. That would
help.
Senator FRANKEN. I just want to move on. You mentioned
ESCOs, and we were talking and Mr. Therriault talked about
PACE.
All of these different financing models that are really, I think,
just revolutionalizing the way we do this because that way you can
finance. Because we were talking about upfront costs, well if you
can get an ESCO to do an energy service performance contract you
can, we can, do this without an upfront cost, right? That is the
whole point of this.
I am running out of time, but I want to tout my ESPCs for alternative vehicles, and can I take a few seconds on this?
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Assistant Secretary Hogan, can you talk about some of the efforts
in your office to develop and deploy more efficient vehicles and how
much energy savings you think are possible with alternative vehicles? The reason I am bringing this up is what my bill would do
is allow the government to buy fleets of new, energy efficient vehicles using energy service performance contracts.
Dr. HOGAN. Yeah, certainly we have got a number of goals that
we are trying to achieve in the Federal sector to improve the efficiency of our Federal fleets in addition to the work we are doing
with buildings and facilities. We do have challenges with the mechanisms that we have in the Federal fleets world, so I think being
able to explore new mechanisms that can allow us to look at those
and more and bring in more efficient vehicles and get the financing
as help to do that would be a great thing to examine.
Senator FRANKEN. Because vehicles and equipment account for
over 60 percent of the Federal Governments energy use and over
70 percent of its energy expenditures. So if we could do this, this
would be a great way of cutting energy costs for the government.
Thank you. Thank you for this hearing and for all your support
for energy efficiency both to the Chair and the Ranking Member.
The CHAIRMAN. Thank you, Senator Franken, Senator Cantwell,
and all the members who have clearly not only engaged today but
have been engaging for a long period of time.
I think we have a great deal of common ground here that we can
explore as we move forward in this first title of our energy bill. But
some of the priorities that have been placed in front of us, not only
with the legislation that is under consideration, but just some of
the good work that has been in place in our states as those laboratories or has been suggested. And working through individuals
with really great ideas about how we can really make a difference
when it comes to providing for a level of efficiency that is common
sense that people want to participate in, that helps with jobs, it
helps with the economy, it helps with the environment.
As I say, it is all good when it comes to our energy, and energy
efficiency is that first energy source that we need to be looking to
for a level of common sense.
So thank you for your respective leadership in different areas
here, and know that we will be looking to you for further comments
as we build out these titles.
And with that, we stand adjourned.
[Whereupon, at 12:26 p.m. the hearing was adjourned.]
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